Rancho Palos Verdes City Council
   

JUNE 15, 2004 OCEAN TRAILS - PEER REVIEW PANEL SERVICES

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF PLANNING, BUILDING AND CODE ENFORCEMENT

DATE: JUNE 15, 2004

SUBJECT: OCEAN TRAILS - PEER REVIEW PANEL SERVICES

Staff Coordinator: Gregory Pfost, AICP, Deputy Planning Director

RECOMMENDATION

That the City Council authorize the Mayor and City Clerk to sign an amendment to the existing agreement between the City and Ocean Trails pertaining to the Peer Review Panel.

EXECUTIVE SUMMARY

The City and Ocean Trails have agreed that a Peer Review Panel will settle a current geological dispute regarding Landslide A and the location of the Foundation Set-back Line, which determines where residential structures can be built in proximity to Landslide A. Since the agreement was entered into, two additional geologic disputes have arisen. Ocean Trails has requested that the current agreement between the City and Ocean Trails be amended to broaden the scope of the Peer Review Panel so that they can also review these additional geologic disputes. Staff recommends that the City Council approve of the amended agreement, as the Peer Review Panel is the most expeditious and equitable method to address the disputes.

BACKGROUND

In June 1992, the City Council approved the Ocean Trails project, which, at that time, included an 18-hole golf course, clubhouse, public open space and 83 single-family residential lots. The project as currently entitled includes an 18-hole golf course, 75 single-family residential lots, 4 on-site affordable housing units, a Clubhouse, Maintenance Building, open space lots, and a variety of public amenities.

Currently, Phase I Grading, which is composed of the golf course and all of Tract No. 50667, including the residential lots located on the east side of the Ocean Trails project, is nearing completion. Additionally, since the final map for Tract 50667 has been approved by the City Council and recorded, and the grading for the residential lots within Tract No. 50667 has been completed, the developer can begin selling and building residential homes in that tract. Phase II grading, which encompasses the housing portion of VTTM 50666 is currently under construction. As the Council knows, Ocean Trails plans to revise VTTM 50666 to install a driving range, residential duplex units and hotel casitas/bungalows in place of some of the proposed residential lots within VTTM 50666. However, the City has yet to receive an application to amend VTTM 50666 for these purposes.

Construction on the landslide repair is moving forward. In fact, the rough grading has been completed, and the developer is in the process of conducting the finish contouring and planting for this portion of the golf course. Ocean Trails projects that the full 18-hole golf course, with all recent modifications completed (waterfalls, tee and green changes), will be open in Fall/Winter 2004.

In addition to Landslide C, two other existing ancient landslides (Landslides A and B) are located within the boundaries of VTTM 50666. A portion of the golf course (Holes #10 and #11) is located on Landslide A. Staff has informed the developer that because there are uncertainties as to the exact location of the boundaries of Landslide A and the respective foundation setback line that determines where residential homes may be constructed in proximity to Landslide A, this issue will need to be addressed prior to City Council approval of the Final Map for Tract 50666.

Cotton Shires Associates (CSA) is the City's geotechnical consultant responsible for reviewing geotechnical issues pertaining to the Ocean Trails project. Shortly after the failure of Landslide C, which occurred on June 2, 1999, the City engaged the assistance of a "panel of experts" to provide additional third-party geotechnical review over the complexities surrounding the landslide repair efforts. The "panel of experts" included Bing Yen, Glenn Brown and Monte Ray.

In addition to reviewing the landslide repair, the "panel" was involved in the review of other geotechnical issues pertaining to Ocean Trails, such as the Landslide A issue discussed above. The purpose of the Peer Review Panel's involvement in this issue was to settle a difference of opinion between the City's Geologist (CSA) and the Developer's Geologist (Converse Consultants). Basically, CSA feels that Landslide A daylights into VTTM 50666 further inland and into some of the residential lots, than what Converse Consultants believes. Although both parties believed that there was enough evidence to prove either side, the Peer Review Panel was unable to make a determination as to which party was correct. Instead, they requested that additional review of existing data be performed and additional data be obtained in the field. Since Ocean Trails felt that there was enough information available to make a decision on this issue, Ocean Trails requested that a new Peer Review Panel be formed and that both the City and Ocean Trails agree to be bound by the recommendations and determinations of the new Panel.

Subsequently, through a process agreed to by both the City and Ocean Trails, a new Peer Review Panel was formed. The new panel is composed of two geologists, Mr. Eldon Gath and Mr. Scott Kerwin, and one geotechnical engineer, Mr. Glenn Tofani. On September 2, 2003, the City Council approved an agreement between Ocean Trails and the City as well as contracts between the City and the respective Peer Review Panel Members. Since September 2nd, both CSA and Converse Consultants have submitted data regarding Landslide A to the peer Review Panel Members. Ocean Trails had concerns with CSA's data as they felt it included new information and as such, requested that Converse Consultants be able to prepare an amended report to the Peer Review Panel. The City agreed. Although a subsequent report from Converse Consultants has not yet been submitted, Ocean Trails has recently indicated to the City that it should be submitted within the next 2-3 weeks.

Since the Council approved the Peer Review Panel agreement with Ocean Trails, two additional geologic disputes between CSA and Converse Consultants have arisen. They involve the Clay Cap/As-Built Report and the proposed expansion to the Clubhouse Building.

The Clay Cap/As-Built Report is the final report that is to be prepared by the developer after all improvements have been made to the 18-hole course. It will discuss any geologic issues that arose during construction, changes to the project during construction, and monitoring procedures for the project after the project opens. The City Geologist, CSA, is required to approve the Report prior to the opening of the 18-hole course (Staff has advised the developer of this fact). Basically, the report acts like a certificate of use and occupancy, meaning that if CSA grants approval, they are stating that the course can be permanently open to the public. To date, Converse Consultants disagrees with CSA as to what additional work is needed before the Report can be approved.

When the Council approved the Clubhouse Expansion on August 19, 2003, the Staff Report noted that the condition requiring a 1.5 Factor of Safety (FOS) would continue to be enforced and would need to be satisfied prior to issuance of any building permits for the proposed expansion. The issue of dispute is that Converse Consultants believes that data presented proves that there is a 1.5 FOS for the Clubhouse Expansion, while CSA believes that there is not sufficient sub-surface data to support the interpretations that Converse Consultants was providing in their reports, and that additional sub-surface data needs to be collected.

DISCUSSION

From time to time, the City has retained one or more geologic and/or geotechnical experts to review determinations made by other experts in those fields. Frequently, several experts from different disciplines have been retained by the City and have comprised a "panel of experts." Sometimes experts have been used to corroborate determinations or recommendations that have been made to the City, and on other occasions, one or more experts have been used to settle a dispute between a project expert and an expert that has been retained by the City to review the project expert’s work. In both instances, having other experts available to the City has been helpful in successfully resolving the issue.

The City Attorney has prepared an amended agreement between the City and Ocean Trails. The amended agreement simply expands the scope of the existing agreement to include the Peer Review Panel's review of other geologic issues besides the Landslide A issue. City Staff and Ocean Trails Staff have jointly (as required by the existing agreement) contacted the Peer Review Panel Members, who have all agreed to review other geologic issues related to the project site.

ALTERNATIVES

In addition to the staff recommendation, the City Council may also wish to consider the following alternatives:

A. Decline to execute the amended agreement with Ocean Trails. If this alternative were selected, Staff has identified the following three likely outcomes:

    1. Ocean Trails would be required to satisfy the City geologists (CSA) requirements prior to: a) allowing any construction in the area subject to Landslide A; b) allowing the 18-hole golf course to be opened to the public; and c) allowing for the construction of the Clubhouse expansion.
    2. Ocean Trails could litigate the issues in a court of law.
    3. The City could select a new geologic consultant to review all data prepared to date and render their opinion/approval on the respective issues.

B. Identify any issues of concern with the process or the amended agreement, provide Staff with any direction, and continue the item to the next Council meeting.

FISCAL IMPACT

The current agreement with each of the Peer Review Panel Members contains a fee for service to be paid to the Panel Member by the City. However, there are no Fiscal Impacts to the City as a result of this decision, as all fees paid to the Panel Members by the City are through a Trust Deposit Account replenished by the developer. Of course, if Alternative A above is selected, the City may be faced with costs associated in defending the City's position if these issues are litigated in a court of law.

Respectfully submitted:

Joel Rojas, AICP

Director of Planning, Building and Code Enforcement

Reviewed By:

Les Evans

City Manager

ATTACHMENT

Agreement between the City and Ocean Trails

REVISED AND RESTATED AGREEMENT BETWEEN THE CITY OF

RANCHO PALOS VERDES AND V.H. PROPERTIES, CORPORATION

THIS REVISED AND RESTATED AGREEMENT is made and entered this ____ day of ___________, 2004, by and between the City of Rancho Palos Verdes, a California municipal corporation ("City") and V.H. Properties, Corporation ("Developer"). City and Developer are sometimes referred to singularly herein as "Party" and collectively as the "Parties."

RECITALS

A. Developer is the owner of that certain real property encompassed within Tentative Tract Map No. 50666, a portion of which is proposed for single-family residential development (the "Property"). The Property is part of a larger development, which is owned by Developer and is generally located at 1 Ocean Trails Drive, Rancho Palos Verdes, California, commonly known as the Ocean Trails Project ("Ocean Trails"). Ocean Trails consists of a 258-acre site bounded by Palos Verdes Drive South on the north, the Portuguese Bend Club on the west, the Pacific Ocean on the south and Shoreline Park on the east.

B. City approved various applications for the Ocean Trails project to allow the construction of a Residential Planned Development of 75 single family dwelling units and the development of an 18-hole golf course with associated clubhouse and parking facilities.

C. The Property encompasses three landslide areas. Because portions of the Property that are being developed for residential purposes may be affected by one or more landslides on the Property, the public safety, health and welfare require that the geological and geotechnical conditions of the Property be thoroughly analyzed and addressed before construction of the proposed residences may proceed.

D. City and Developer have each retained experts to analyze the geological conditions that underlie the site of the proposed residential units and to make recommendations regarding the potential development of the Property. However, given the inherent complexity of the geology on the Property and the inherent subjectivity of the science of geology, the Parties’ respective experts have not always agreed on the geologic conditions on the Property or the actions that are necessary to achieve a factor of safety of at least 1.5 for the development of the residential lots.

E. In the past, the Parties have found it useful to utilize a three-member panel of independent experts to review the geological and geotechnical data for the Ocean Trails Project in order to resolve any differences between the Parties’ respective experts. However, the former panel of experts did not provide the definitive guidance desired by either City or Developer regarding the development of the residential lots in Tentative Tract 50666. Accordingly, City and Developer desire to form a new three-member panel (the "Panel") to resolve any disputes regarding the geotechnical and geological issues affecting the Property.

F. City and Developer desire to cooperate to select three new geological/geotechnical experts to comprise the Panel. City and Developer further desire to enter into this Agreement to memorialize their understanding with respect to this subject matter and their commitment to proceed with the review of the geotechnical and geological conditions of the Property and to be bound by the recommendations and conclusions of the Panel.

G. City and Developer wish to revise the original Agreement between the Parties to broaden its scope so that the Panel can resolve any disputes between the City’s geological and geotechnical experts and the experts that are performing work on behalf of Developer regarding the geotechnical and geological conditions affecting the Property.

NOW, THEREFORE, in consideration of the mutual promises, obligations and covenants hereinafter set forth, the Parties hereto agree as follows:

Section 1. Incorporation of Recitals. Each and every recital set forth above is hereby incorporated by this reference as though set forth in full and expressly made a part of this Agreement.

Section 2. Selection of Panel Experts. City and Developer hereby agree that the three experts who will be members of the Panel will be selected as follows: City and Developer each shall provide a list of experts who are eligible for selection to the panel. Each Party shall have the right to veto any expert included on the other party’s list. Each Party shall select one geologist from the other party’s approved list to participate on the Panel. The two geologists who have been selected to participate on the Panel are set forth on Exhibit A, which is attached hereto and incorporated herein by this reference. These two geologists then shall select the third expert from a list of geotechnical engineers who have been approved by both Parties pursuant to the process set forth in this Section 2. The final list of individuals who will comprise the three-member Panel are set forth on Exhibit B to this Agreement, which is attached hereto and incorporated herein by this reference.

Section 3. Impartial Review. The Parties hereby acknowledge and agree that although City shall retain the three experts who will comprise the Panel, the Panel shall be charged with providing an impartial analysis of the geological and geotechnical data related to the Property and to resolve disagreements between City’s geological and geotechnical experts and the experts that are performing work on behalf of Developer. The Parties further acknowledge and agree that the Panel shall be instructed not to meet, either individually or as a panel, privately with either the City, its geologists or its geotechnical engineers or the Developer, its geologists or its geotechnical engineers. City and Developer further agree that: (i) City and Developer shall limit their contact with the Panel to times when both Parties are present; (ii) City and Developer shall have equal input into the Panel’s performance of its impartial review; and (iii) City and Developer shall provide joint instructions to the Panel. However, nothing in this Section 3 shall be construed to prevent the members of the Panel from meeting with one another privately to discuss the geological and geotechnical data, nor shall this Section 3 prevent the Panel from seeking additional input from the Parties, so long as such requested input shall be either communicated to the City and the Developer in a meeting at which both parties are present or in writing, which is provided to both Parties simultaneously.

Section 4. Compensation for Panel. Upon execution of this Agreement, Developer shall deposit with the City the sum of $25,000. City shall hold these funds in a trust account established for the purpose of compensating the members of the Panel for their services rendered pursuant to this Agreement. When the balance in the trust account drops below $5,000, City shall notify Developer and request additional funds. Developer shall deposit such additional funds with City within ten (10) business days of receipt of the written request from the City. Notwithstanding the immediately preceding sentence, Developer shall not be in default hereunder if it fails to deposit such additional funds with City, but either party shall have the right to terminate this Agreement if Developer fails to deposit such additional funds with City, all as more specifically set forth in Section 5 below. Nothing herein shall be construed to permit Developer to fail to reimburse City for work that already has been performed by the Panel.

Section 5. Termination. If Developer fails to deposit any additional funds contemplated by Section 4 above or Section 8 below, then Developer shall not be default hereunder, but either Developer or City shall have the right to terminate this Agreement by providing at least thirty (30) days advance written notice to the other Party. Additionally, if Developer sells or otherwise transfers substantially all of the residential property contained within Tentative Tract Map No. 50666 to a person or entity that is not affiliated with or related to Developer, then Developer shall have the right to terminate this Agreement by providing at least thirty (30) days advance written notice to the City. If this Agreement is terminated prior to the resolution of the geologic issues concerning the Property, the members of the Panel shall be compensated for the work that has been performed as provided in Section 4, and City again shall use its standard process of having its geologists and geotechnical engineers review the reports and recommendations of the Developer’s experts. Developer further acknowledges that if this Agreement is terminated prior to the resolution of the geologic issues concerning the Property, Developer shall not have the right to rely on this Agreement, that the issue of the developability of the residential lots in Tract 50666 may not have been resolved to City’s satisfaction, and that City shall not be bound by this Agreement.

Section 6. Scope of Panel’s Review. The Panel shall provide an impartial analysis of the geological and geotechnical data related to the Property and shall resolve disagreements between City’s geological and geotechnical experts and the experts that are performing work on behalf of Developer. In particular, the Panel shall determine the stability of the residential portions of Tract 50666 and whether those lots are impacted by the geological and geotechnical conditions of Landslide A. However, City and Developer hereby acknowledge and agree not to restrict the areas that the Panel may explore to make such determination and to defer to the judgment of the Panel with respect to what additional geologic studies and tests, if any, should be conducted and what additional changes or improvements, if any, should be incorporated into the Project in order to permit such residential development. The Panel also shall review the geological and geotechnical reports that have been prepared and resolve: (1) the dispute regarding the proposed expansion to the Clubhouse; (2) the dispute concerning the Clay Cap/As Built Report regarding the construction of the Golf Course, and (3) any other area of dispute between the City’s geological and geotechnical experts and the experts that are performing work on behalf of Developer.

Section 7. Hold Harmless and Covenant not to Sue. The Parties hereby acknowledge that the Panel is being retained to resolve differences between the respective geological/ geotechnical experts retained by the Parties in order to allow Developer to complete the development of the Project, and that the Panel is solely providing impartial analysis and recommendations based on their combined professional judgment and are not preparing geotechnical designs for any future residential structures on those lots or insuring that the stability is sufficient to safely support such structures. The Parties further acknowledge that the members of the Panel are not in any way interested in the development of the Property, either financially or otherwise, and would not provide the advice contemplated by this Agreement absent assurances by the Parties that they will not sue the Panel or its individual members based on the advice provided. Accordingly, City and Developer hereby covenant and agree not to sue the Panel or any of its individual members for any advice, opinions, conclusions or recommendations the Panel makes with respect to the geological and geotechnical conditions underlying the Property and the stability of the proposed residential sites. Developer further agrees to indemnify, defend and hold the Panel and each member thereof harmless from any claims, losses, costs or damages that results from geological instability on the Property. The members of the Panel are third party beneficiaries of this Agreement, and the provisions of this Section 7 shall also run to the benefit of the members of the Panel as if made directly to them. This Covenant shall survive the termination of this Agreement.

Section 8. Covenant to be Bound. City and Developer hereby covenant and agree that any decisions and recommendations rendered by the Panel shall be binding on both City and Developer, including, but not limited to: (i) any decisions supporting, or disagreeing with, the recommendations or conclusions of one Party’s experts; and (ii) any conclusions or recommendations arrived at independently by the Panel, including any recommendations regarding additional studies, borings or analysis to be performed or improvements to be constructed. The Parties further agree to take all steps reasonably necessary to diligently pursue and implement the recommendations of the Panel. Notwithstanding the foregoing, Developer shall not be in default hereunder if Developer elects not to incur any additional cost or expense as a result of any such recommendations provided that, in such event, either Party shall have the right to terminate this Agreement as more specifically provided in Section 5 above. This Agreement shall inure to the benefit of and bind the Parties to this Agreement and each of their respective heirs, assigns and successors in interest. Nothing herein shall be construed to grant the Panel any authority to obligate the City to incur any expense whatsoever; and except as expressly provided herein, nothing herein shall be construed to grant the Panel any authority to obligate the Developer to incur any expense whatsoever.

Section 9. Further Assurance. Each Party hereto agrees to take such actions, and to execute such certificates and other instruments, as may be necessary or appropriate to give effect to and carry out the provisions of this Agreement.

Section 10. Integration and Amendment.

      1. This Agreement, and any documents incorporated herein by specific reference, represents the entire and integrated agreement between Developer and City with respect to the subject matter hereof. This Agreement supersedes all prior negotiations, representations or agreements, whether oral or written.
      2. This Agreement may not be amended, modified, or expanded except by a written instrument signed by each of the Parties hereto.
      3. The City has entered into an agreement with each of the members of the Panel. Those three agreements are attached hereto as Exhibits C, D, and E and are incorporated herein by this reference, and shall not be amended without Developer’s prior written consent. This Agreement shall not be amended, terminated or otherwise modified without thirty days advance written notice first being provided to all of the members of the Panel.

Section 11. Assignment. Neither Party shall assign its interest in this Agreement, or any portion of this Agreement, without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, Developer shall have the right to assign this Agreement to any person or entity to whom Developer sells substantially all of the residential portions of Tentative Tract Map No. 50666 provided that at least fifteen days prior to the effective date of such assignment, Developer shall give written notice thereof to City, and provided, further, that Developer shall deliver to City a copy of the proposed assignment and assumption agreement for City’s review and approval, which shall not be unreasonably withheld, and Developer shall deliver a copy of the executed assignment and assumption agreement, in the form approved by the City, prior to the effective date of the assignment.

Section 12. Interpretation. This Agreement is deemed to have been prepared by both of the Parties hereto, after consulting with legal counsel, and any uncertainty or ambiguity herein shall not be interpreted against the drafter, but rather, if such ambiguity or uncertainty exists, shall be interpreted according to the applicable rules of interpretation of contracts under the law of the State of California.

Section 13. Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California.

Section 14. Notices. Any notice required or authorized to be given by this Agreement shall, unless otherwise specified herein, be in writing, shall be served on the receiving Party either by personal delivery or deposit in the United States mail with first-class postage prepaid, and shall be addressed to the receiving party’s specified contact person and address listed below, unless written notice is provided of a change of address as to either party. For the purposes of this Agreement, notices delivered in person shall be deemed communicated as of the date of actual receipt; notices sent via regular mail shall be deemed communicated as of three (3) days after deposit thereof in the United States mail, addressed as shown on the addressee’s registry or certificate of receipt.

All notices served pursuant to this Agreement shall be addressed as follows:

If to City: Les Evans, City Manager

City of Rancho Palos Verdes

30940 Hawthorne Boulevard

Rancho Palos Verdes, California 90275

With a copy to:

Carol W. Lynch, City Attorney

Richards, Watson & Gershon

355 South Grand Avenue, 40th Floor

Los Angeles, California 90071

If to Developer: V.H. Properties Corporation

1 Ocean Trails Drive

Rancho Palos Verdes, California 90275

Attn: Jeff Kaplinski

With a copy to:

Kenneth Wolfson, Esq.

Latham & Watkins

650 Town Center Drive, 20th Floor

Costa Mesa, California 92626-1925

Either City or Developer may change its mailing address at any time by giving written notice of such change to the other party in the manner provided herein at least ten (10) days prior to the date such change is effected.

IN WITNESS WHEREOF, Developer and City have executed this Agreement as of the date first hereinabove written.

CITY OF RANCHO PALOS VERDES

By: ________________________________

Peter C. Gardiner, Mayor

ATTEST:

__________________________________

Jo Purcell, City Clerk

V. H. PROPERTIES CORPORATION

By: ________________________________

Name:

Title:

By: ________________________________

Name:

Title:

EXHIBIT A

GEOLOGISTS THAT HAVE BEEN APPROVED BY BOTH PARTIES

 

Eldon Gath of Earth Consultants International

Scott Kerwin of AMEC Earth and Environmental, Inc.

 

EXHIBIT B

FINAL MEMBERS OF THE PANEL

Eldon Gath of Earth Consultants International

Scott Kerwin of AMEC Earth and Environmental, Inc.

Glenn Tofani of Geokinetics

EXHIBIT C

AGREEMENT WITH AMEC EARTH &ENVIRONMENTAL, INC.

EXHIBIT D

AGREEMENT WITH EARTH CONSULTANTS INTERNATIONAL

EXHIBIT E

AGREEMENT WITH GEOKINETICS